I think you need to talk to your son about what is actually going on.
Everyone's views on welcoming him with open arms vs cock lodger are just muddying the waters.
Why - if he already has a job and a flat with people he likes - is he suddenly determined to up sticks and move home?
He says it's just to have cash in his pocket - but really? Ignore all these people shooting "entitled!!!" I think it's strange. Everyone in their twenties wishes they had more money. That doesn't mean they all suddenly move home - unless they are saving for a specific purpose, and he hasn't said that.
When I've been unhappy (living away in my twenties, paying rent, have a stable job - medal please...
) I've often jokingly said to my parents "prepare my room, i'm coming home!" and they say "Sure!", knowing full well I won't. I just like to have that comforting thought that if it all really did go tits up, I could go back (which is why I thought the poster who threw out her 25 year old son's bed the day after he left was really harsh - but who am I to say anything. I was the "perfect child" who moved out at 18).
I wonder if the op's son has just taken this "comfort thought" a bit further. It doesn't sound like he really has any concrete plans at all other than the vague "get another job" (surely you'd do that beforehand??) How far away does he live? It just seems really weird that he'd be prepared to let it all go for the sake of this vague venture - which is why, instead of being "horrified" at the prospect, you should try to get to the bottom of things. Just ask how he is. Don't go in with all guns blazing and asking for more than the market rate or any other of some of the ridiculous suggestions listed here.
And finally - two points:
A common viewpoint is that previous generations had an easy ride when it came to housing. It was easier to buy - but that didn't mean that they didn't know real sacrifice. As someone in her twenties, I think older people really did know what it was like to lead very modest lifestyles. I don't know what happened - maybe they wanted to give us kids stuff they never had - but for my peer group, we really do struggle with the idea of what is modest. We're paid less than before, but we try to lead lifestyles of people who earn a lot more! There isn't much you can do to try and change the habits of an entire generation. But we eat out, and we travel. It all adds up. To be honest, it's reckless. But that's what people do these days.
One thing that goes some way to explain this behaviour is the fact that, for lots of young people renting in the private sector, if they don't move home/have someone give them a deposit, even trying to save enough themselves is just a futile exercise, so might as well enjoy life while we:re going because probably the future is fucked. I save a bit, but let's face it, the bulk of my earnings goes on rent and so that's the price I pay for my happy, independent life in my twenties. Will I look back and think that was the "right" choice? I don't know. But I did have fun.